Why Sony should buy Square Enix from Final Fantasy Maker

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Square Enix, the creator of the popular Final Fantasy games, is a good fit for Sony.

Ina Fassbender/AFP via Getty Images


sony

has to pump itself up to stave off multi-trillion dollar gaming rival Microsoft. Another Japan-based game company may be just what the PlayStation owner needs.

The video game industry is the most attractive growth market in technology and media. According to research firm Newzoo, the global gaming market will grow to $223 billion by 2024, up from $193 billion last year.

It’s no surprise that there’s been a feeding frenzy for game makers lately. Microsoft (symbol:


MSFT

) sparked the latest wave by spending $7.5 billion on ZeniMax Media, which closed last year. The tech giant then followed it up with its blockbuster $69 billion deal to


ActivisionBlizzard

(ATVI) earlier this year. That same month,


Take-Two interactive software

(TTWO) announced an $11 billion purchase of the mobile game maker


Zynga

(ZNGA) and Sony (


SONY
) also said it would buy privateer game developer Bungie for $3.6 billion.

Sony has not finished shopping. In January, Sony Interactive Entertainment CEO Jim Ryan said he planned to buy more studios.

It’s important to note that gaming IPs are the common thread running through all industry acquisitions, from ZeniMax’s Fallout and Elder Scrolls franchises to Activision’s Call of Duty games. Branded franchises are key to increasing revenue and attracting consumers to a console platform.

That’s why Square Enix is ​​a perfect fit for Sony. It has two beloved franchises that have generations of fans after more than three decades of releases: Final Fantasy, which sold over 160 million units in its lifetime, and Dragon Quest, with over 80 million sold. units sold.

Sony is known for its award-winning single-player experiences, including Last of Us to Spider-Man. Sure, the popular Final Fantasy games would fit right in. But Square Enix would also be a great complement to Sony’s new strategic goal of creating more live service titles or games that have a real-time community component using the Internet.

Final Fantasy XIV is one of the few successful online role-playing games. Last year, the game was so popular that Square Enix was forced to suspend new sales because its servers were overloaded with players. With its larger scale and better technical infrastructure, Sony could help address capacity issues.

Sony and Square Enix did not immediately respond to requests for comment on the possibility of a takeover.

A merger wouldn’t break the bank for Sony either. Square Enix has a market value of around $5 billion. Any takeover would cost far less than Microsoft has agreed to pay for Activision.

In fact, there may be a sign that Square Enix is ​​gearing up for a possible sale. On Monday, the company announced that it had agreed to sell several studios and intellectual properties, including Tomb Raider, Deus Ex and Legacy of Kain, to the Swedish company.


Embracer Group AB

for $300 million.

Many experts were surprised by the low price of the transaction. But one of the benefits of divesting underperforming assets is that it could set the stage for a larger player, such as Sony, to make a cleaner acquisition of the remaining properties. For example, Tomb Raider would be almost useless for the PlayStation owner because it has a similar Indiana Jones-like franchise called Uncharted.

Sony should act quickly. Tech companies around the world are actively looking to buy out game companies. There aren’t many high-quality indie game companies like Square Enix left.

Email Tae Kim at [email protected]

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